Advance-Fee Credit Card Purveyors Banned from Telemarketing

Miami-based telemarketers, who were charged with deceiving Spanish-speaking consumers through their marketing of pre-approved, advance fee MasterCards, free ATM and phone cards, and a free-trial membership in a discount health plan, have been banned from telemarketing. In addition, the defendants are banned from selling similar goods and services in the future by any means. The defendants will pay cash and the proceeds from the sale of certain assets, including condominiums and real estate investments, to settle the Federal Trade Commission’s charges.

According to the FTC, the defendants bilked more than 30,000 consumers out of more than $4 million, running nationwide advertising on Telemundo, Telefutura, Galavision, and other Spanish-language television networks. For $138-$200, the defendants promised consumers a pre-approved, guaranteed Amerikash Mastercard and a number of incentive items, including free ATM cards, phone cards, and vacation vouchers. The defendants’ telemarketers also offered a free-trial membership in the Amerikhealth discount health plan, which consumers had to cancel before the free-trial period expired to avoid monthly charges.

The FTC complaint alleged that in numerous instances, consumers never received a MasterCard, received only some or none of the free items defendants offered, and that the items consumers received often did not work. In connection with the Amerikhealth discount health plan, the complaint alleged that the defendants misrepresented the free-trial offer by failing to provide consumers with a free-trial period at all or by thwarting consumers’ efforts to cancel during the free-trial period. The complaint also alleged that the defendants improperly charged consumers’ credit cards or bank accounts for the discount health plan, did not obtain consumers’ express verifiable authorization for the charges, and continued to charge consumers on a recurring basis without their written authorization

The U.S. District Court for the Southern District of Florida entered stipulated final orders that ban the defendants – Remote Response Corporation; Alberto Salama, Samuel Salama, Elias Salama and Joseph Bensabat, co-owners of Remote Response; and German Espitia, president of Instant Way Corp. – from telemarketing and from ever selling credit, debit, stored value, ATM or phone cards, travel or gas vouchers, vacation package discounts, or health discount plans. The Court previously entered an order of default judgment and permanent injunction against defendant Instant Way Corp. on August 2, 2006.

The orders also enter $4,164,558 judgments – the total amount of consumer injury – against each of the defendants. The judgments were partially suspended against Remote Response and the three Salama defendants based on their financial condition and their agreement to turn over funds frozen by the Court and the proceeds from the sale of three condominiums and from their interests in several real estate development limited liability companies. The judgment was partially suspended against German Espitia based on his financial condition and his agreement to turn over funds frozen by the Court and the proceeds from the sale of two condominiums. The full $4,164,558 judgments would be due if the defendants misrepresented their financial conditions.

The Court’s orders also prohibit defendants from making misrepresentations about the goods and services they sell, and from charging consumers improperly. For example, the defendants are prohibited from misrepresenting that consumers will receive goods or services, that they will receive them free of charge, or that they bear certain characteristics or can be used in a particular way. The defendants also are prohibited from misrepresenting the terms and conditions of free-trial offers. In connection with obtaining payment for “free-to-pay” offers, the orders prohibit the defendants from improperly debiting consumers’ bank accounts or charging their credit or debit cards. For example, they are prohibited from charging consumers when consumers reject a sales offer; before a free-trial period expires; after consumers have cancelled; or when defendants have thwarted consumers’ ability to cancel. Finally, the defendants cannot make recurring electronic fund transfers from a consumer’s bank account without obtaining the consumer’s authenticated authorization and providing a copy to the consumer.

The Commission vote to authorize staff to file the stipulated final orders was 5-0. District Court Judge Cecilia M. Altonaga signed the stipulated final orders, amended in connection with the parties' signatures, and they were entered by the U.S. District Court for the Southern District of Florida on August 23, 2007.

NOTE: These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order has the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click https://www.ftccomplaintassistant.gov/ or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.